WEBVTT - Netflix Shares Plunge; Morgan Stanley Posts Steep Trading Slide 0:00:02.640 --> 0:00:05.360 Welcome to the Bloomberg Penl podcast. I'm Paul Swinge. You 0:00:05.360 --> 0:00:07.680 along with my co host Lisa Brahma Wicks. Each day 0:00:07.720 --> 0:00:10.240 we bring you the most noteworthy and useful interviews for 0:00:10.280 --> 0:00:12.520 you and your money, whether at the grocery store or 0:00:12.560 --> 0:00:15.480 the trading floor. Find a Bloomberg Penl podcast on Apple 0:00:15.520 --> 0:00:17.960 podcast or wherever you listen to podcasts, as well as 0:00:17.960 --> 0:00:22.880 at Bloomberg dot com. Well, we are just about through 0:00:23.079 --> 0:00:25.920 the earnings results for the big banks. We had Morgan 0:00:25.960 --> 0:00:28.800 Stanley report earnings this morning. Kind of a mixed bag, 0:00:28.840 --> 0:00:31.240 I would say, from some of the big money center 0:00:31.360 --> 0:00:33.320 banks and global investment banks. That kind of help us 0:00:33.360 --> 0:00:36.200 pass through what we are seeing. We welcome Ken. Leon 0:00:36.320 --> 0:00:39.199 Ken is a global director of Industry and Equity Research 0:00:39.280 --> 0:00:41.839 at c f R. A Ken, thanks so much for 0:00:42.040 --> 0:00:44.519 joining us. Let's start with Morgan Stanley since they just 0:00:44.560 --> 0:00:47.920 printed this morning. What would you take away there? So 0:00:48.200 --> 0:00:51.800 it was an earning speed eight sets and they did 0:00:51.840 --> 0:00:56.560 this really on the more stable businesses and wealth management. 0:00:57.200 --> 0:01:01.920 Asset management and cost control areas that are really a 0:01:01.960 --> 0:01:05.240 burden right now are tied to the capital markets. Uh, 0:01:05.360 --> 0:01:10.960 the equity underwriting was flat sixtent come down, m and 0:01:11.040 --> 0:01:13.240 A has really fallen off for Morgan, failing at other 0:01:13.319 --> 0:01:16.479 banks down eighteen percent, and of course trading as well. 0:01:16.840 --> 0:01:20.520 UM has been weak with investors on the sidelines as 0:01:20.560 --> 0:01:24.800 it relates to global worries about trade tariffs and things 0:01:24.880 --> 0:01:28.240 like that. So Ken wired shares basically flat this morning. 0:01:29.480 --> 0:01:31.679 Shares are flat UM, and I would say all the 0:01:31.760 --> 0:01:35.880 large banks had a terrific four week performance, you know, 0:01:35.959 --> 0:01:39.759 first starting with the June seven Federal Reserve approving their 0:01:39.800 --> 0:01:43.600 capital plans. UM. Morgan Fanley is up about ten percent 0:01:43.760 --> 0:01:48.760 since June. UM. Looking at the stock today, we reiterate 0:01:48.840 --> 0:01:51.400 our by recommendation. We have a forty nine dollar target 0:01:51.440 --> 0:01:55.080 price and feel that, uh, you know, the overhang just 0:01:55.360 --> 0:01:58.880 on the capital markets, you know, for Morgan Stanley to 0:01:59.000 --> 0:02:00.600 hit it out of the park or a fire on 0:02:00.640 --> 0:02:05.920 all cylinders need to see improvement related to investment banking. 0:02:06.840 --> 0:02:08.680 So Ken, let's talk to let's go to the capital 0:02:08.720 --> 0:02:11.280 market side of the business for these big banks here 0:02:11.320 --> 0:02:13.600 it's been you know, I'm just thinking back, you know, 0:02:13.720 --> 0:02:16.720 three or four or five quarters, it's been very difficult 0:02:16.800 --> 0:02:19.000 for these companies to put us some good numbers. And 0:02:19.040 --> 0:02:21.440 I'm just wondering, is this kind of a a cyclical 0:02:21.600 --> 0:02:26.280 issue just market conditions or is this something more secular 0:02:26.320 --> 0:02:30.080 about just kind of the profitability that these capital markets 0:02:30.120 --> 0:02:33.520 desks and businesses can generate for these big investment banks. 0:02:33.560 --> 0:02:37.920 It's a great question, and related to capital markets, particularly banking, 0:02:38.000 --> 0:02:41.560 it's it's cyclical. Um. You know, Morgan's Familey, Goldman and 0:02:41.639 --> 0:02:45.160 JP Morgan are usually typically in the top three rankings 0:02:45.240 --> 0:02:49.240 of anything you choose and underwriting, and then when it 0:02:49.280 --> 0:02:55.680 relates to their business, Morgans Faniley has been really moving 0:02:55.680 --> 0:03:00.880 away from kind of cyclical businesses to the ability to 0:03:00.919 --> 0:03:03.760 have more stable recurring revenue and they're getting that from 0:03:03.760 --> 0:03:09.960 a Lard's wealth management franchise and the ability to expand that. Um. 0:03:10.000 --> 0:03:13.360 The difference really in performance for these stocks versus other 0:03:13.840 --> 0:03:18.919 others in the financial sectors predictability. So um, yes, capital 0:03:19.040 --> 0:03:22.280 markets is important, but I think directionally, whether you look 0:03:22.320 --> 0:03:25.840 at a Morgan Stanley or Goldman Sachs diversifying it to retail, 0:03:26.200 --> 0:03:29.799 they're they're looking for more predictable businesses that give investors 0:03:29.840 --> 0:03:33.200 more confidence about their outlook. So Ken, you know, now 0:03:33.200 --> 0:03:36.200 that we have the major US banks all reporting, I'm wondering, 0:03:36.400 --> 0:03:40.520 what do you mean your big takeaways. The big takeaway 0:03:40.560 --> 0:03:44.360 is focuses on the inverted deield curve or the forward curve, 0:03:44.680 --> 0:03:48.320 which suggests um a narrowing of net interest margin and 0:03:48.360 --> 0:03:53.000 then lower net interest income and calibrating what that does 0:03:53.080 --> 0:03:56.320 for the earnings outlook. So that's a factor. But at 0:03:56.320 --> 0:03:59.040 the same time, there's other inputs into net interest income, 0:03:59.080 --> 0:04:02.960 which for the other large banks of that can be 0:04:03.080 --> 0:04:07.320 you know, of their total net revenue UM it's growth 0:04:07.320 --> 0:04:11.240 and investor accounts or in retail banking. Uh, the consumer 0:04:11.320 --> 0:04:16.520 is very strong. Yet each of these banks has sensitivity 0:04:16.560 --> 0:04:19.640 to net interest income, so they have to pull growth 0:04:20.000 --> 0:04:23.760 from non interest income, which is their businesses, and then 0:04:23.800 --> 0:04:27.159 also from cost control. The other big plus, because we 0:04:27.320 --> 0:04:30.760 we've moved the story away from the capital plans, these 0:04:30.800 --> 0:04:34.160 are very significant for all these acts. The ability to 0:04:34.320 --> 0:04:38.080 have significant return of capital with buy back and dividend 0:04:38.200 --> 0:04:42.000 increases including more in Stanley today now to ten point 0:04:42.080 --> 0:04:45.560 seven billion buy back six pin point seven percent dividend 0:04:45.839 --> 0:04:50.040 increased rays these banks are beginning to look at attractive 0:04:50.120 --> 0:04:53.960 total return yield stocks and you could not say that 0:04:54.000 --> 0:04:57.240 over the last seven to ten years. So I guess 0:04:57.279 --> 0:04:59.400 can one thing I'm struggling with I mean, I get 0:04:59.400 --> 0:05:02.800 the sort buy back dividend story. It's just an income story. 0:05:03.320 --> 0:05:04.880 But going back to what you were talking about with 0:05:04.880 --> 0:05:08.400 the net interest margin, this has been offset in the 0:05:08.440 --> 0:05:11.719 past years of financial oppression in the wake of zero 0:05:11.800 --> 0:05:17.120 rate policies. It's been offset by much higher capital markets activity. 0:05:17.160 --> 0:05:18.960 What does it say to you that we are not 0:05:19.080 --> 0:05:22.839 seeing that acceleration in capital markets activity now and you 0:05:22.880 --> 0:05:26.599 know the prospects going forward, even with lower rates ahead, 0:05:27.240 --> 0:05:30.240 the prospects that perhaps capital markets are kind of done 0:05:30.440 --> 0:05:32.880 as far as what they need to be doing well. 0:05:32.880 --> 0:05:37.120 There's two areas here. First, related to interest rates, that 0:05:37.279 --> 0:05:39.479 this is a reversal to where we were at the 0:05:39.560 --> 0:05:43.600 end of last year. So analysts were factoring and rising rates, 0:05:43.680 --> 0:05:47.000 perhaps two to three increases, and that went away, So 0:05:47.080 --> 0:05:49.839 then of course that reverse net interesting income. The other 0:05:49.880 --> 0:05:52.480 part of your question is really interesting and it really 0:05:52.520 --> 0:05:55.760 ties to what's going to spur the capital markets. We 0:05:55.839 --> 0:06:00.240 had Chairman Pal two weeks ago testifying essentially the worry 0:06:00.360 --> 0:06:04.360 is about in the US at least investment capital investment 0:06:04.360 --> 0:06:09.120 and plant and equipment um and there's been a delay 0:06:09.240 --> 0:06:13.680 in doing that. There's also uncertainties that really tied to 0:06:13.839 --> 0:06:18.280 CEO confidence. Uh the ability to invest here or overseas 0:06:18.760 --> 0:06:24.320 or even mergers and acquisitions for all these banks is down. UM. 0:06:24.360 --> 0:06:28.400 There is a good pipeline related to uh N N 0:06:28.480 --> 0:06:32.560 a UM, but it's been very challenging right now because 0:06:32.720 --> 0:06:37.200 the visibility is very difficult. Ken Leyan, thank you so 0:06:37.279 --> 0:06:39.279 much for being with us and for all of your insights. 0:06:39.320 --> 0:06:42.120 Can lea On, Global Director of Industry and Equity Research 0:06:42.160 --> 0:07:00.960 at c f r A Research. It's ten thirty three 0:07:01.000 --> 0:07:03.440 on Wall Street. Time to check in with Bloomberg Opinion. 0:07:03.480 --> 0:07:06.200 We are so lucky to be joined by Shara O. 0:07:06.279 --> 0:07:10.600 V Day Bloomberg opinion columnists focusing on all things technology. Obviously, 0:07:10.640 --> 0:07:13.560 today the big story not just in technology but broadly 0:07:13.560 --> 0:07:17.760 across stock markets. Netflix shares down more than ten percent. 0:07:18.400 --> 0:07:23.000 They reported yesterday after the bell that they missed their 0:07:23.000 --> 0:07:27.280 subscriber forecast by what more than fifty percent, almost almost 0:07:27.320 --> 0:07:30.960 fifty percent, and that it's a subscriber base dropped in 0:07:30.960 --> 0:07:34.560 the United States. What happened? I do not know. I 0:07:34.600 --> 0:07:39.880 think the company's company. What is your explanation? The company's 0:07:39.920 --> 0:07:44.840 explanation was a couple of things. One is that Netflix 0:07:45.160 --> 0:07:48.840 increased prices for most subscription plans, both in the United 0:07:48.880 --> 0:07:52.400 States and in several other countries at the beginning of 0:07:52.400 --> 0:07:54.680 this year. Starting at the beginning of this year, and 0:07:54.720 --> 0:07:58.440 the company said that it missed its subscriber forecast um 0:07:58.480 --> 0:08:00.760 even more than an expected in as places where it 0:08:00.840 --> 0:08:03.720 increased prices, which to me shows a lack of pricing 0:08:03.760 --> 0:08:06.280 power for Netflix. Right if if the idea of Netflix 0:08:06.360 --> 0:08:08.920 is this thing is so valuable, people will pay whatever 0:08:08.960 --> 0:08:11.440 it costs to get access to it, I think this 0:08:11.680 --> 0:08:14.480 these second quarter numbers kind of deflated that idea. The 0:08:14.520 --> 0:08:18.760 second issue Netflix raised was it has, you know, It's outs, 0:08:18.840 --> 0:08:21.680 all of these kind of original programmings or stuff that 0:08:21.720 --> 0:08:24.880 it buys and airs exclusively on Netflix, and it said 0:08:24.920 --> 0:08:27.280 that the slate of programming in the second quarter drew 0:08:27.320 --> 0:08:30.720 in fewer subscribers than it had expected, which is not 0:08:30.800 --> 0:08:34.160 a great sign either for Netflix ability to kind of 0:08:34.160 --> 0:08:38.680 pick must watch programming, or frankly, for this implicit promise 0:08:38.720 --> 0:08:42.360 of Netflix that it doesn't really matter. Individual pieces of 0:08:42.400 --> 0:08:45.320 content are not that material. The thing that matters is 0:08:45.360 --> 0:08:48.400 this kind of buffet of offerings. So if people are 0:08:48.400 --> 0:08:51.560 looking at that buffet and making a decision to turn 0:08:51.640 --> 0:08:55.120 off Netflix or not subscribe to Netflix because of one 0:08:55.240 --> 0:08:59.000 or two shows. That maybe indicates that individual pieces of 0:08:59.040 --> 0:09:02.120 programming are more were important that Netflix suggests. And again 0:09:02.120 --> 0:09:06.319 I think that that dense the thesis behind the optimistic 0:09:06.320 --> 0:09:09.600 scenario about Netflix. Sure, I think you're spot on there. 0:09:09.640 --> 0:09:11.240 I think that and that raises I think probably the 0:09:11.280 --> 0:09:13.480 big issue for a lot of people that are concerned 0:09:13.480 --> 0:09:16.200 about this doctor bears out there that boy, it kind 0:09:16.240 --> 0:09:18.880 of sounds and looks like it's starting to sound starting 0:09:18.880 --> 0:09:20.680 to look like more of a just a traditional media 0:09:20.679 --> 0:09:23.400 company where you gotta have hits, and you know, it's 0:09:23.400 --> 0:09:25.800 not just about having the you know, there's the secret 0:09:25.800 --> 0:09:28.240 sauce of oh I'm a streamer. Now did they talk 0:09:28.280 --> 0:09:30.920 at all about uh, to what extent did they talk 0:09:30.960 --> 0:09:33.600 about competition? Because we know that Disney Plus is launching 0:09:33.640 --> 0:09:36.559 this year than a T and T Comcast or launching 0:09:36.559 --> 0:09:38.680 their streamers next year? How did they kind of frame 0:09:38.720 --> 0:09:42.640 that up? Netflix, at least in the second quarter, downplayed 0:09:42.720 --> 0:09:46.400 the effective competition because it said, look, we were all 0:09:46.440 --> 0:09:52.439 aware of these looming competing Netflix like services from HBO 0:09:52.720 --> 0:09:55.760 or or from a T and T, s Time Warner division, 0:09:56.280 --> 0:09:59.920 from Apple, from NBC down the road. But those haven't 0:10:00.080 --> 0:10:03.480 started yet, right, So it's not like there's an immediate, uh, 0:10:03.960 --> 0:10:07.920 competitive threat out there that is currently launched Disney. I 0:10:08.000 --> 0:10:11.480 forgot to mention Disney. So there's nothing new necessarily on 0:10:11.520 --> 0:10:13.200 the horizon. But you've got to think that some of 0:10:13.200 --> 0:10:17.480 the competition, it's it's in people's brains, right. If you know, hey, 0:10:17.520 --> 0:10:20.040 there's gonna be this new thing from Disney or from HBO, 0:10:20.440 --> 0:10:22.720 maybe that plays in people's minds that they're kind of 0:10:22.720 --> 0:10:24.839 saving money to see what Apple comes up with or 0:10:24.880 --> 0:10:27.120 what Disney comes up with. But Netflix kind of said 0:10:27.160 --> 0:10:29.520 that that wasn't a factor in the second quarter. So 0:10:29.640 --> 0:10:34.320 this sounds bad, okay, I mean like just a suit 0:10:34.880 --> 0:10:39.160 a stute analysis from Trunch and Trunch analysis. Um, this 0:10:39.240 --> 0:10:41.719 all sounds really bad. And certainly you're seeing a big 0:10:41.760 --> 0:10:44.400 stock price move. Looks at the bonds. Some of them 0:10:44.480 --> 0:10:46.440 traded down, you know, a couple of cents on the 0:10:46.480 --> 0:10:50.079 dollar yesterday, but there's still trading above par. And this 0:10:50.120 --> 0:10:52.720 is a company that has relied on debt markets to 0:10:53.000 --> 0:10:55.760 continue to burn cash, and it seems like debt markets 0:10:55.800 --> 0:10:59.080 believe in them. They're saying, we believe and you're seeing investors, 0:10:59.440 --> 0:11:02.280 analysts a cross wall streets saying we do believe also, 0:11:02.320 --> 0:11:03.880 and we're going to say we should you should go 0:11:03.880 --> 0:11:06.600 out and buy Netflix shares. What's the bull case from 0:11:06.640 --> 0:11:09.160 here that this was just a temporary blip and that 0:11:09.200 --> 0:11:12.040 we'll see Netflix gain its mojo in the third quarter. 0:11:12.280 --> 0:11:15.120 I think the bull case is that, as you said 0:11:15.160 --> 0:11:17.120 that that this may be a blip, you see that 0:11:17.240 --> 0:11:19.920 Netflix is expecting that it's going to return to more 0:11:20.040 --> 0:11:24.400 normal kind of subscriber growth numbers in this current third quarter. 0:11:24.840 --> 0:11:28.920 But let me make it clear Netflix does not exist 0:11:29.360 --> 0:11:33.840 period without the faith of bond investors. This is a 0:11:33.880 --> 0:11:36.240 company that is burning three to three and a half 0:11:36.280 --> 0:11:39.680 billion dollars in cash every single year. It is not 0:11:39.960 --> 0:11:44.079 financially sustainable unless it can continue to borrow money at 0:11:44.160 --> 0:11:48.000 cheap rates. Otherwise there is no Netflix. And so anything 0:11:48.040 --> 0:11:52.040 that dnse the story dense the optimism of both bond 0:11:52.120 --> 0:11:54.600 and stock investors, which are kind of working in tandem 0:11:54.640 --> 0:11:58.920 here on Netflix. Anything that that dnse, that story threatens 0:11:58.960 --> 0:12:03.199 to kind of unraveled. This whole thing. Just a little 0:12:03.200 --> 0:12:07.120 fun fact. Sure, Overday and I have bonded for for 0:12:07.280 --> 0:12:11.040 months and months over the Netflix story because we share 0:12:11.360 --> 0:12:16.640 joint interests account account, start account. We merely think that 0:12:16.720 --> 0:12:21.560 bond investors are completely irrational? What and we do not. 0:12:22.280 --> 0:12:24.199 I no longer write columns, so I'm not going to 0:12:24.320 --> 0:12:27.640 say that. But they're just it's a hundred forty million 0:12:27.640 --> 0:12:30.600 dollars of equity cushion underneath my I don't have to worry. 0:12:30.640 --> 0:12:33.160 So that's that. That's kind of play. Bloomberg Opinion columnists. 0:12:33.200 --> 0:12:53.400 You're overday, Thank you so much. Well, investors are trying 0:12:53.440 --> 0:12:56.120 to gauge where the US economy is amidst you know, 0:12:56.200 --> 0:13:00.280 weakening economies in Europe, slowing economy in China. How can 0:13:00.280 --> 0:13:03.080 the US economy remain vibrant when many of its trading 0:13:03.120 --> 0:13:07.120 partners are struggling to get the latest We welcome our guest, 0:13:07.280 --> 0:13:10.760 God Lebanon, Chief Economists North America at the conference board. 0:13:11.200 --> 0:13:14.040 Uh so, God, what's the data that you're seeing telling 0:13:14.080 --> 0:13:17.720 you about the US economy? Well, so, our leading economic 0:13:17.800 --> 0:13:21.640 index decline today, and that's not good news. But it's 0:13:21.640 --> 0:13:25.480 not as bad as bad as it looks. I think 0:13:26.160 --> 0:13:30.520 our index is slightly tilted towards the manufacturing sector, which 0:13:30.600 --> 0:13:34.640 is doing not as well as the rest of the economy. Um. 0:13:35.400 --> 0:13:38.000 I think, on the other hand, we have a very 0:13:38.040 --> 0:13:42.679 strong consumer spending numbers in recent months. You know, there 0:13:42.720 --> 0:13:45.839 was after the week winter there was a concern that 0:13:46.000 --> 0:13:50.240 the consumer spending is going to remain in a slow territory. 0:13:50.320 --> 0:13:54.120 But that's not the case. Um So, I think the 0:13:54.880 --> 0:13:57.400 decline in the leading index is not as bad as 0:13:57.400 --> 0:13:59.679 it looks. It's interesting though, to me, because this is 0:13:59.720 --> 0:14:03.640 the story we keep hearing. The consumer is strong, industrials 0:14:03.800 --> 0:14:08.280 and corporate America feeling less certain and certainly seeing less investment. 0:14:08.800 --> 0:14:13.280 Uh So, is this sort of indicative of the consumer 0:14:13.360 --> 0:14:17.080 being a lagging indicator and manufacturers being out front in 0:14:17.080 --> 0:14:21.080 the economic cycle or the other way around. Well, in general, 0:14:21.880 --> 0:14:27.440 consumer spending is actually leading business investment historically. I think 0:14:27.720 --> 0:14:30.960 part of the weakness that we are seeing now in 0:14:31.000 --> 0:14:33.880 business investment and in manufacturing is a result of the 0:14:33.920 --> 0:14:37.360 weakness in the rest of the world. But I think, 0:14:37.600 --> 0:14:42.360 and you know, if if manufacturing and business investment will 0:14:42.440 --> 0:14:45.920 remain slow at some point, it will impact hiring and 0:14:45.920 --> 0:14:49.000 and consumer spending as well. But at the moment, there 0:14:49.040 --> 0:14:56.320 seems to be some stronger, stronger growth, independent growth, I 0:14:56.320 --> 0:14:59.320 would say, from the consumer. So when we talk about 0:14:59.360 --> 0:15:01.560 you highlight the man facturing sector we've we've had some 0:15:01.600 --> 0:15:04.640 evidence that that has been weakening over the last several quarters. 0:15:05.360 --> 0:15:06.840 I'm just trying to parse out how much of that 0:15:07.000 --> 0:15:10.800 is just kind of trade concerns, Um, you know, maybe 0:15:11.560 --> 0:15:13.880 corporate spending kind of pulling back in the face of 0:15:13.960 --> 0:15:16.360 uncertainty about trade. Or is it just the kind of 0:15:16.360 --> 0:15:18.720 a slowing or just part of the cycle here we 0:15:18.760 --> 0:15:20.520 are ten plus years into a cycle. Do you have 0:15:20.520 --> 0:15:22.480 a sense of how much it's just Hey, it's just 0:15:22.520 --> 0:15:25.160 the psychle versus boy, I'm really concerned about some of 0:15:25.200 --> 0:15:28.720 these macro geopolitical issues. I think it's it's both. We 0:15:28.720 --> 0:15:32.320 we sometimes have cycles in manufacturing that don't spread to 0:15:32.360 --> 0:15:35.760 the rest of the economy. Like twenty fifteen twenty sixteen 0:15:35.800 --> 0:15:40.440 we had a genuine recession in manufacturing that the economy 0:15:40.480 --> 0:15:43.880 continued to grow. I think the manufacturing, as I said, 0:15:44.000 --> 0:15:46.560 is more impacted by the rest of the world, and 0:15:46.640 --> 0:15:50.200 there is some significant weakness in some parts of the world. 0:15:51.200 --> 0:15:55.360 So I think, um, it is a lot because of that. 0:15:55.680 --> 0:15:59.520 But if consumer spending continues to grow at three plus 0:15:59.520 --> 0:16:03.080 per cent and manufacturing at some point will pick up. So, 0:16:03.160 --> 0:16:04.800 just to put this in a perspective, the zero point 0:16:04.800 --> 0:16:09.000 three pc decline in the leading economic indicators. The index 0:16:09.400 --> 0:16:12.880 is the first decline since last December. And you talked 0:16:12.920 --> 0:16:15.720 about the manufacturing how that let it, But the housing 0:16:15.800 --> 0:16:18.360 side of things, the real estate side, I'm trying to 0:16:18.400 --> 0:16:21.040 figure out where that fits into the narrative because that 0:16:21.200 --> 0:16:25.080 also contributed to the decline. Yeah, so housing has been 0:16:25.080 --> 0:16:29.080 a weakness for a year. But I think one of 0:16:29.160 --> 0:16:33.440 the main implications of the large drop in interest rates 0:16:33.480 --> 0:16:37.160 that we have in the economy, and and over a 0:16:37.360 --> 0:16:41.120 hundred basis point drop in long term rates will boost 0:16:41.160 --> 0:16:45.560 the economy, and so a lot of the impact should 0:16:45.600 --> 0:16:48.840 be through housing. We are seeing already some increase in 0:16:49.320 --> 0:16:55.240 mortgage applications and I think housing will will improve for 0:16:55.320 --> 0:16:58.680 the rest of the year. So, God, where are you 0:16:58.800 --> 0:17:02.480 in the recession discussion? But there are certain parties out there, 0:17:02.480 --> 0:17:05.040 a certain factions in the marketplace that feel like, Gee, 0:17:05.040 --> 0:17:06.840 the timing, if nothing else would lead us to a 0:17:06.880 --> 0:17:10.560 recession perhaps by mid twenty What is your data telling you. 0:17:11.440 --> 0:17:15.320 I think the leading indicators are good for three to 0:17:15.400 --> 0:17:19.000 six months and they're not signaling any recession during that time. 0:17:19.640 --> 0:17:23.840 Beyond that, I think we have to think what what 0:17:23.880 --> 0:17:28.000 will cause a recession? There could things could pop up, 0:17:28.440 --> 0:17:32.119 but at the moment, I don't see anything obvious that 0:17:32.240 --> 0:17:35.960 will cause a recession. So I think it's as likely 0:17:36.000 --> 0:17:39.000 to happen in twenty twenty one, or twenty twenty two, 0:17:39.680 --> 0:17:43.080 or or twenty twenty. But it's it's not the fact 0:17:43.080 --> 0:17:46.680 that we just broke the historical record for the longest 0:17:46.760 --> 0:17:50.000 expansion doesn't by itself mean that we are about to 0:17:50.040 --> 0:17:52.560 face a recession. God Levanon, thank you so much for 0:17:52.600 --> 0:17:55.320 being with us. God levan and is chief economist for 0:17:55.440 --> 0:17:58.679 North America at the conference port Thanks for listening to 0:17:58.680 --> 0:18:01.399 the Bloomberg Penl podcasts. You can subscribe and listen to 0:18:01.480 --> 0:18:04.720 interviews at Apple Podcasts or whatever podcast platform you prefer. 0:18:04.920 --> 0:18:07.600 I'm Paul Sweeney. I'm on Twitter at pt Sweeney. I'm 0:18:07.640 --> 0:18:10.560 Lisa Abram Woyds. I'm on Twitter at Lisa Abram Woyds. One. 0:18:10.760 --> 0:18:13.359 Before the podcast, you can always catch us worldwide. I'm 0:18:13.400 --> 0:18:14.240 Bloomberg Radio.